Late Payment or Non-Payment of Taxes

Companies must pay their tax within one month from the date of the Notice of Assessment (NOA).  When payment is not received by the due date, a 5% penalty, and a subsequent1% additional penalty, can be imposed on the overdue tax.

 

Late Payment Penalty

Companies have to pay their taxes within one month from the date of the Notice of Assessment (NOA). When payment is not received by the due date, a 5% penalty and subsequently a 1% additional penalty can be imposed for every month that the tax remains unpaid.

GIRO Cancellation

A company whose GIRO deduction was unsuccessful will have its instalment plan (for ECI) cancelled and a 5% penalty imposed on the overdue tax. An unsuccessful GIRO deduction may be due to insufficient funds in the bank account, or a deduction amount that is higher than the limit set by the company. In such instances, IRAS will send a Demand note and a GIRO cancellation letter to inform the company that the GIRO plan has been cancelled. The company must pay the full outstanding tax and the penalty by the Demand Note due date.

If you wish to continue paying your tax by instalments, please call us on (+65) 6356 7012 for us to review your request. The revised instalment plan will include the 5% penalty.

Demand Note and 5% Penalty

When a 5% penalty has been imposed, a Demand Note showing the unpaid tax and penalty will be issued. Payment must be made by the due date stated on the Demand Note to avoid further enforcement actions.

Company Y received a Notice of Assessment (NOA) dated 19 Oct 2015. The due date for the tax payable of $10,000 was 19 Nov 2015 (one month from the date of NOA). As Company Y did not pay the tax by 19 Nov 2015, a 5% penalty of $500 (i.e. 5% x $10,000) was imposed.

Imposition of 1% Additional Penalty

A 1% additional penalty per month may be imposed if the tax is still not paid 60 days after the 5% penalty is imposed. The 1% penalty is imposed for each month that the tax remains unpaid, up to a maximum of 12 months.

Please note that the appointment of the company's bank, tenant, lawyer, etc. as agent to recover the outstanding tax will take place before the 1% additional penalty is imposed.  

   
   

Company Z did not pay the tax payable of $10,000 by the due date on the NOA, and received a Demand Note dated 8 Jun 2015 on the overdue tax and the 5% late penalty. The due date for payment of tax and penalty (i.e. $10,500) on the Demand Note was 8 Jul 2015 (one month from the date of Demand Note). Company Z eventually paid the tax and penalty on 15 Sep 2015.

As the payment was overdue by more than two months after the Demand Note (i.e. Aug and Sep), the total penalty imposed was $700 (i.e. 5% penalty x $10,000 plus 1% additional penalty x $10,000 x 2 months)

 Demand Note Date  Demand Note Due Date Payment Date Tax Amount5% Penalty  Additional 1% Penalty
 8 Jun 2015 8 Jul 2015 15 Sep 2015 $10,000 $500

 $200

($10,000 x 1% x 2 months)

 

 

Appeal for Waiver of Late Payment Penalty

Generally, penalties will not be waived unless there are exceptional circumstances.

IRAS may consider your appeal for a waiver of the late payment penalty if:

  1. This is your first appeal;
  2. You have filed and paid on time in the last two years; and
  3. You undertake to pay your tax by the due date in future. This includes taking measures to ensure that non or late payment will not happen again, such as signing up for GIRO.

Please call us on (+65) 6356 7012 to appeal for waiver. Select option (1) and follow the instructions given over the phone. You will receive a reply within three working days.

Difficulty Paying Tax or Penalties

As a responsible business, the company should make provisions to pay its tax.  If your company is facing financial difficulties, call (+65) 6356 7012 before the payment due date to appeal for an instalment plan. Your company's tax filing and payment compliance record is a major factor when we review your appeal. In addition, you may be required to provide the following documents to substantiate your claims: 

  • Latest bank statements;
  • List of debtors; and
  • Any other documents to prove the company's financial position.

Instalments will usually include the imposition of late payment penalty.

 

Further Enforcement Actions

If the tax and penalty are not paid by the due date on the Demand Note, we may, without prior notice, take action to recover the overdue tax. Examples of such actions include:

  • Appointing the company's bank, tenant, lawyer, etc. as agent to pay the money to IRAS;
  • Taking legal action.

In addition to the above, IRAS may impose an additional penalty of 1% on the overdue tax for each month that the tax remains unpaid.

Releasing Your Bank as Agent

The bank appointed to pay the overdue tax on a company's behalf will be released as agent only after the overdue tax and penalty are paid. The bank will be automatically released after:

  • The bank pays the full outstanding amount to IRAS; or
  • The company pays the full outstanding amount to IRAS. If you have settled the tax payment, please call (+65) 6356 7012 to inform IRAS so that the appointment can be released early.

Please note that banks do not process requests for release on Saturdays, Sundays and Public Holidays. Any request for release received after 2 p.m. on weekdays (Mon-Fri) can only be processed the next working day.

 

Checking Tax balance and Making Payment

Companies can log in to myTax Portal and select “View Accounts Summary” on the left-hand to check their current balance. 

Please refer to Corporate Tax Payments for the various payment modes available.

  • I appointed a tax agent. Who is responsible for my company’s tax matters?

    As the owner of the company, you are still responsible and liable for filing and payment issues, even if your agent failed to settle the filing and payment issues promptly.

     

  • Why is my company penalised for not paying the tax when I have objected to the tax?

    Even if you object to the tax assessed, you will still have to pay the tax as shown on the NOA by the payment due date. If the tax is subsequently amended, any excess payment made will be refunded to you. 

    Example: Penalties and Refunds when an Objection is Filed

    Company X received an estimated NOA with a tax payable of $10,000, dated 24 Aug 2015. The due date for payment was 24 Sep 2015 (one month from the date of NOA). The company filed an objection and did not pay the tax. As no payment was received by the NOA due date, a 5% late payment penalty of $500 was imposed.

    The company paid the tax and penalty on 12 Oct 2015. On 9 Nov 2015, the Assessment was amended to $1,300 and the late payment penalty was revised to $65 (5% penalty on $1,300) accordingly. Excess payment amounting to $9,145 was refunded to the company.

    Date of NOA  Due Date on NOA Date of Payment Tax Amount 5% Penalty
     24 Aug 2015 24 Sep 2015 12 Oct 2015 $10,000$500 
     9 Nov 2015 24 Sep 2015 - ($8,700)($435) 
     Revised Tax and 5% Penalty             $1,300 $65

     

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